Houston’s retail market ends 2016 on a positive note and moves into 2017 as the healthiest commercial real estate sector in the metro. The average vacancy rate remained unchanged at 5.8% on an annual basis and only increased 10 basis point on a quarterly basis from 5.7% in Q3 2016. Although Houston lost about 80,000 high income jobs between 2014 and 2016, retail market indicators show no signs of a struggling economy. According to our data provider, CoStar Property, Houston ranks fourth nationally in construction activity. Approximately 74.6% of the retail space under construction at the close of Q4 2016 is pre-leased. Despite the 1.3M SF of new inventory delivered in Q4 2016, Houston’s average retail vacancy rate remains low at 5.8%, only 10 basis points higher than the 5.7% recorded in the previous quarter.
Houston continues to attract new tenants to the market. Pinstripes, a restaurant and entertainment bowling venue, signed a lease at The Kirby Collection, which is under construction and expected to deliver December 2017. Shake Shack opened its first Houston location in the newly renovated section of the Galleria I. Maryland-based Total Wine & More recently opened its first Houston location in Northwest Houston in The commons at Willowbrook, and a drive-thru grocery concept Farm Stores, has announced plans to open its first Houston -area location in 2017.
Q4 2016 Highlights
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